025 Smart Communications, Inc. (SMART) vs. NTC

1/12/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 408
678 SUPREME COURT REPORTS ANNOTATED

Smart Communications, Inc. (SMART) vs. National
Telecommunications Commission (NTC)
*
G.R. No. 152063. August 12, 2003.
GLOBE TELECOM, INC. (GLOBE) and ISLA

COMMUNICATIONS CO., INC. (ISLACOM), petitioners, vs.
COURT OF APPEALS (The Former 6th Division) and the
NATIONAL TELECOMMUNICATIONS COMMISSION,
respondents.
Administrative Law; National Telecommunications Commission;

Powers; Quasi-Legislative Power; Administrative agencies possess
quasilegislative or rule-making powers and quasi-judicial or administrative
adjudicatory powers.—Administrative agencies possess quasi-legislative or
rule-making powers and quasi-judicial or administrative adjudicatory
powers. Quasi-legislative or rule-making power is the power to make rules
and regulations which results in delegated legislation that is within the
confines of the granting statute and the doctrine of non-delegability and
separability of powers.
Same; Same; Same; Same; The rules and regulations that
administrative agencies promulgate, which are the product of a delegated
legislative power to create new and additional legal provisions that have the
effect of law, should be within the scope of the statutory authority granted
by the legislature to the administrative agency.—The rules and regulations
that administrative agencies promulgate, which are the product of a
delegated legislative power to create new and additional legal provisions
that have the effect of law, should be within the scope of the statutory
authority granted by the legislature to the administrative agency. It is
required that the regulation be germane to the objects and purposes of the
law, and be not in contradiction to, but in conformity with, the standards
prescribed by law. They must conform to and be consistent with the
provisions of the enabling statute in order for such rule or regulation to be
valid. Constitutional and statutory provisions control with respect to what
rules and regulations may be promulgated by an administrative body, as
well as with respect to what fields are subject to regulation by it. It may not
make rules and regulations which are inconsistent with the provisions of the
Constitution or a statute, particularly the statute it is administering or
http://www.central.com.ph/sfsreader/session/00000168400b8d842b117822003600fb002c009e/t/?o=False 1/15
_______________
* FIRST DIVISION.
679
VOL. 408, AUGUST 12, 2003 679
Smart Communications, Inc. (SMART) vs. National Telecommunications

Commission (NTC)
which created it, or which are in derogation of, or defeat, the purpose of a
statute. In case of conflict between a statute and an administrative order, the
former must prevail.
Same; Same; Same, Quasi-Judicial Power; The administrative body
exercises its quasi-judicial power when it performs in a judicial manner an
act which is essentially of an executive or administrative nature.—Not to be
confused with the quasi-legislative or rule-making power of an
administrative agency is its quasi-judicial or administrative adjudicatory
power. This is the power to hear and determine questions of fact to which
the legislative policy is to apply and to decide in accordance with the
standards laid down by the law itself in enforcing and administering the
same law. The administrative body exercises its quasi-judicial power when
it performs in a judicial manner an act which is essentially of an executive
or administrative nature, where the power to act in such manner is incidental
to or reasonably necessary for the performance of the executive or
administrative duty entrusted to it. In carrying out their quasi-judicial
functions, the administrative officers or bodies are required to investigate
facts or ascertain the existence of facts, hold hearings, weigh evidence, and
draw conclusions from them as basis for their official action and exercise of
discretion in a judicial nature.
Same; Same; Same; Exhaustion of Administrative Remedies;
Exception; In questioning the validity or constitutionality of a rule or
regulation issued by an administrative agency, a party need not exhaust
administrative remedies before going to court.—In questioning the validity
or constitutionality of a rule or regulation issued by an administrative
agency, a party need not exhaust administrative remedies before going to
court. This principle applies only where the act of the administrative agency
concerned was performed pursuant to its quasi-judicial function, and not
when the assailed act pertained to its rule-making or quasi-legislative power.
Same; Same; Same; Doctrine of Primary Jurisdiction; The doctrine of
primary jurisdiction applies only where the administrative agency exercises
its quasi-judicial or adjudicatory function.—In like manner, the doctrine of
primary jurisdiction applies only where the administrative agency exercises

its quasi-judicial or adjudicatory function. Thus, in cases involving
specialized disputes, the practice has been to refer the same to an
administrative agency of special competence pursuant to the doctrine of
primary jurisdiction. The courts will not determine a controversy involving
a question which is within the jurisdiction of the administrative tribunal
prior to the resolution of that question by the administrative tribunal, where
the question demands the exercise of sound administrative discretion
requiring the special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact,
and a uni-
680
Smart Communications, Inc. (SMART) vs. National Telecommunications

Commission (NTC)
formity of ruling is essential to comply with the premises of the regulatory

statute administered. The objective of the doctrine of primary jurisdiction is
to guide a court in determining whether it should refrain from exercising its
jurisdiction until after an administrative agency has determined some
question or some aspect of some question arising in the proceeding before
the court. It applies where the claim is originally cognizable in the courts
and comes into play whenever enforcement of the claim requires the
resolution of issues which, under a regulatory scheme, has been placed
within the special competence of an administrative body; in such case, the
judicial process is suspended pending referral of such issues to the
administrative body for its view.
Constitutional Law; Judicial Power; Words and Phrases; Definition;
Where what is assailed is the validity or constitutionality of a rule or
regulation issued by the administrative agency in the performance of its
quasilegislative function, the regular courts have jurisdiction to pass upon
the same.—Where what is assailed is the validity or constitutionality of a
rule or regulation issued by the administrative agency in the performance of
its quasi-legislative function, the regular courts have jurisdiction to pass
upon the same. The determination of whether a specific rule or set of rules
issued by an administrative agency contravenes the law or the constitution is
within the jurisdiction of the regular courts. Indeed, the Constitution vests
the power of judicial review or the power to declare a law, treaty,
international or executive agreement, presidential decree, order, instruction,
ordinance, or regulation in the courts, including the regional trial courts.
This is within the scope of judicial power, which includes the authority of
the courts to determine in an appropriate action the validity of the acts of the
political departments. Judicial power includes the duty of the courts of
justice to settle actual controversies involving rights which are legally

demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government.
PETITION for review on certiorari of a decision of the Court of

Appeals.
The facts are stated in the opinion of the Court.

Quevedo, Español, Ibay, Syquia-Santos & Plaza-Cortez, and
Ian R.A. Pangalangan for petitioners in G.R. No. 151908.
Salalima & Gonzales for Globe Telecoms, Inc.
Latina & Castelo for Isla Communications Co., Inc.
The Solicitor General for respondents.
681
VOL. 408, AUGUST 12, 2003 681

YNARES-SANTIAGO, J.:
Pursuant to its rule-making and regulatory powers, the National

Telecommunications Commission (NTC) issued on June 16, 2000
Memorandum Circular No. 13-6-2000, promulgating rules and
regulations on the billing of telecommunications services. Among its
pertinent provisions are the following:
(1) The billing statements shall be received by the subscriber of

the telephone service not later than 30 days from the end of
each billing cycle. In case the statement is received beyond
this period, the subscriber shall have a specified grace
period within which to pay the bill and the public
telecommunications entity (PTEs) shall not be allowed to
disconnect the service within the grace period.
(2) There shall be no charge for calls that are diverted to a
voice mailbox, voice prompt, recorded message or similar
facility excluding the customer’s own equipment.
(3) PTEs shall verify the identification and address of each
purchaser of prepaid SIM cards. Prepaid call cards and SIM
cards shall be valid for at least 2 years from the date of first
use. Holders of prepaid SIM cards shall be given 45 days
from the date the prepaid SIM card is fully consumed but
not beyond 2 years and 45 days from date of first use to
replenish the SIM card, otherwise the SIM card shall be
rendered invalid. The validity of an invalid SIM card,
however, shall be installed upon request of the customer at
no additional charge except the presentation of a valid

prepaid call card.
(4) Subscribers shall be updated of the remaining value of their
cards before the start of every call using the cards.
(5) The unit of billing for the cellular mobile telephone service
whether postpaid or prepaid shall be reduced from 1 minute
per pulse to 6 seconds per pulse. 1The authorized rates per
minute shall thus be divided by 10.
The Memorandum Circular provided that it shall take effect 15 days

after its publication in a newspaper of general circulation and three
certified true copies thereof furnished the UP Law Center. It was
published in the newspaper, The Philippine Star, on June 22,
_______________
1 Rollo, G.R. No. 151908, pp. 225-228. 681
682

2
2000. Meanwhile, the provisions of the Memorandum Circular
pertaining to the sale and use of prepaid cards and the unit of billing
for cellular mobile telephone service took effect 90 days from the
effectivity of the Memorandum Circular.
On August 30, 2000, the NTC issued a Memorandum to all
cellular mobile telephone service (CMTS) operators which
contained measures to minimize if not totally eliminate the
incidence of stealing of cellular phone units. The Memorandum
directed CMTS operators to:
a. strictly comply with Section B(l) of MC 13-6-2000

requiring the presentation and verification of the identity
and addresses of prepaid SIM card customers;
b. require all your respective prepaid SIM cards dealers to
comply with Section B(l) of MC 13-6-2000;
c. deny acceptance to your respective networks prepaid and/or
postpaid customers using stolen cellphone units or
cellphone units registered to somebody other than the
applicant when properly informed of all information
relative to the stolen cellphone units;
d. share all necessary information of stolen cellphone units to
all other CMTS operators in order to prevent the use of
stolen cellphone units; and
e. require all your existing prepaid SIM card3 customers to

register and present valid identification cards.
This was followed by another Memorandum dated October 6, 2000

addressed to all public telecommunications entities, which reads:
This is to remind you that the validity of all prepaid cards sold on 07
October 2000 and beyond shall be valid for at least two (2) years from date
of first use pursuant to MC 13-6-2000.
In addition, all CMTS operators are reminded that all SIM packs used by
subscribers of prepaid cards sold on 07 October 2000 and beyond shall be
valid for at least two (2) years from date of first use. Also, the billing unit
shall be on a six (6) seconds
4
pulse effective 07 October 2000.
For strict compliance.
_______________
2 Rollo, G.R. No. 152063, p. 112.

3 Rollo, G.R. No. 151908, p. 229.
4 Id., p. 230.
683
VOL. 408, AUGUST 12, 2003 683

On October 20, 2000, petitioners Isla Communications Co., Inc. and

Pilipino Telephone Corporation filed against the National
Telecommunications Commission, Commissioner Joseph A.
Santiago, Deputy Commissioner Aurelio M. Umali and Deputy
Commissioner Nestor C. Dacanay, an action for declaration of
nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing
Circular) and the NTC Memorandum dated October 6, 2000, with
prayer for the issuance of a writ of preliminary injunction and
temporary restraining order. The complaint was docketed as Civil
Case No. Q-00-42221
5
at the Regional Trial Court of Quezon City,
Branch 77.
Petitioners lslacom and Piltel alleged, inter alia, that the NTC
has no jurisdiction to regulate the sale of consumer goods such as
the prepaid call cards since such jurisdiction belongs to the
Department of Trade and Industry under the Consumer Act of the
Philippines; that the Billing Circular is oppressive, confiscatory and
violative of the constitutional prohibition against deprivation of
property without due process of law; that the Circular will result in
the impairment of the viability of the prepaid cellular service by
unduly prolonging the validity and expiration of the prepaid SIM
and call cards; and that the requirements of identification of prepaid
card buyers and call balance announcement are unreasonable.

Hence, they prayed that the Billing Circular be declared null and
void ab initio.
Soon thereafter, petitioners Globe Telecom, Inc. and Smart
Communications, Inc. filed a joint Motion6
for Leave to Intervene
and to Admit Complaint-in-Intervention. This was granted by the
trial court.
On October 27, 2000, the trial court issued a temporary
restraining order enjoining the NTC from implementing
Memorandum Circular
7
No. 13-6-2000 and the Memorandum dated
October 6, 2000.
In the meantime, respondent NTC and its co-defendants filed a
motion to dismiss the case on the ground of petitioners’ failure to
exhaust administrative remedies.
Subsequently, after hearing petitioners’ application for
preliminary injunction as well as respondent’s motion to dismiss, the
trial
_______________
5 Id., pp. 231-247.

6 Id., pp. 248-270.
7 Id., pp. 271-273, at 273; penned by Judge Vivencio S. Baclig.
684

court issued on November 20, 2000 an Order, the dispositive portion

of which reads:
“WHEREFORE, premises considered, the defendants’ motion to dismiss is

hereby denied for lack of merit. The plaintiffs’ application for the issuance
of a writ of preliminary injunction is hereby granted. Accordingly, the
defendants are hereby enjoined from implementing NTC Memorandum
Circular 13-6-2000 and the NTC Memorandum, dated October 6, 2000,
pending the issuance and finality of the decision in this case. The plaintiffs
and intervenors are, however, required to file a bond in the sum of FIVE
HUNDRED THOUSAND 8
PESOS (P500,000.00), Philippine currency.
SO ORDERED.”
Defendants filed a motion for reconsideration,

9
which was denied in
an Order dated February 1, 2001.
Respondent NTC thus filed a special civil action for certiorari
and prohibition with the Court of Appeals, which was docketed as
CA-G.R. SP No. 64274. On October 9, 2001, a decision was

rendered, the decretal portion of which reads:
“WHEREFORE, premises considered, the instant petition for certiorari and

prohibition is GRANTED, in that, the order of the court a quo denying the
petitioner’s motion to dismiss as well as the order of the court a quo
granting the private respondents’ prayer for a writ of preliminary injunction,
and the writ of preliminary injunction issued thereby, are hereby
ANNULLED and SET ASIDE. The private respondents’ complaint and
complaint-in-intervention below are hereby DISMISSED, without prejudice
to the referral of the private respondents’ grievances and disputes on the
assailed issuances of10the NTC with the said agency.
SO ORDERED.”
Petitioners’ motions for reconsideration were

11
denied in a Resolution
dated January 10, 2002 for lack of merit.
_______________
8 Id., pp. 274-277.

9 Id., p. 278.
10 Id., pp. 123-132, at 131-132; penned by Associate Justice Rodrigo V. Cosico,
concurred in by Associate Justices Ramon A. Barcelona and Alicia L. Santos.
11 Id., pp. 134-136.
685
VOL. 408, AUGUST 12, 2003 685

Hence, the instant petition for review filed by Smart and Piltel,
which was docketed as G.R. No. 151908, anchored on the following
grounds:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

HOLDING THAT THE NATIONAL TELECOMMUNICATIONS
COMMISSION (NTC) AND NOT THE REGULAR COURTS HAS
JURISDICTION OVER THE CASE.
B.
THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED

IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO
EXHAUST AN AVAILABLE ADMINISTRATIVE REMEDY.
C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT

HOLDING THAT THE BILLING CIRCULAR ISSUED BY THE
RESPONDENT NTC IS UNCONSTITUTIONAL AND CONTRARY TO
LAW AND PUBLIC POLICY.
D.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING

THAT THE PRIVATE RESPONDENTS FAILED TO SHOW THEIR
CLEAR POSITIVE RIGHT TO WARRANT
12
THE ISSUANCE OF A WRIT
OF PRELIMINARY INJUNCTION.
Likewise, Globe and Islacom filed a petition for review, docketed

as G.R. No. 152063, assigning the following errors:
1. THE HONORABLE COURT OF APPEALS SO

GRAVELY ERRED BECAUSE THE DOCTRINES OF
PRIMARY JURISDICTION AND EXHAUSTION OF
ADMINISTRATIVE REMEDIES DO NOT APPLY
SINCE THE INSTANT CASE IS FOR LEGAL
NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES
AND VIOLATIONS OF LAW) OF A PURELY
ADMINISTRATIVE REGULATION PROMULGATED
BY AN AGENCY IN THE EXERCISE OF ITS RULE
MAKING POWERS AND INVOLVES ONLY
QUESTIONS OF LAW.
GRAVELY ERRED BECAUSE THE DOCTRINE ON
EXHAUSTION OF ADMINIS-
_______________
12 Id, pp. 23-24.
686

TRATIVE REMEDIES DOES NOT APPLY WHEN THE

QUESTIONS RAISED ARE PURELY LEGAL
QUESTIONS.
GRAVELY ERRED BECAUSE THE DOCTRINE OF
EXHAUSTION OF ADMINISTRATIVE REMEDIES
DOES NOT APPLY WHERE THE ADMINISTRATIVE
ACTION IS COMPLETE AND EFFECTIVE, WHEN
THERE IS NO OTHER REMEDY, AND THE

PETITIONER STANDS TO SUFFER GRAVE AND
IRREPARABLE INJURY.
GRAVELY ERRED BECAUSE PETITIONERS IN FACT
EXHAUSTED ALL ADMINISTRATIVE REMEDIES
AVAILABLE TO THEM.
GRAVELY ERRED IN ISSUING ITS QUESTIONED
RULINGS IN THIS CASE BECAUSE GLOBE AND 13
ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.
The two petitions

14
were consolidated in a Resolution dated February
17, 2003.
On March 24, 2003, the petitions were given due course15 and the
parties were required to submit their respective memoranda.
We find merit in the petitions.
Administrative agencies possess quasi-legislative or rule-making
powers and quasi-judicial or administrative adjudicatory powers.
Quasi-legislative or rule-making power is the power to make rules
and regulations which results in delegated legislation that is within
the confines of the granting statute16 and the doctrine of non-
delegability and separability of powers.
The rules and regulations that administrative agencies
promulgate, which are the product of a delegated legislative power
to create new and additional legal provisions that have the effect of
law, should be within the scope of the statutory authority granted by
the legislature to the administrative agency. It is required that the
regulation be germane to the objects and purposes of the law, and be
not in contradiction to, but in conformity with, the stan-
_______________
13 Rollo, G.R. No. 152063, pp. 14-15.

14 Id., pp. 389-390.
15 Id., pp. 391-392.
16 Bellosillo, J., Separate Opinion, Commissioner of Internal Revenue v. Court of
Appeals, 329 Phil. 987, 1017; 261 SCRA 236 [1996].
687
VOL. 408, AUGUST 12, 2003 687

17
dards prescribed by law. They must conform to and be consistent
with the provisions of the enabling statute in order for such rule or
regulation to be valid. Constitutional and statutory provisions
control with respect to what rules and regulations may be

promulgated by an administrative body, as well as with respect to
what fields are subject to regulation by it. It may not make rules and
regulations which are inconsistent with the provisions of the
Constitution or a statute, particularly the statute it is administering or
which created it, or which are in derogation of, or defeat, the
purpose of a statute. In case of conflict between18
a statute and an
administrative order, the former must prevail.
Not to be confused with the quasi-legislative or rule-making
power of an administrative agency is its quasi-judicial or
administrative adjudicatory power. This is the power to hear and
determine questions of fact to which the legislative policy is to apply
and to decide in accordance with the standards laid down by the law
itself in enforcing and administering the same law. The
administrative body exercises its quasi-judicial power when it
performs in a judicial manner an act which is essentially of an
executive or administrative nature, where the power to act in such
manner is incidental to or reasonably necessary for the performance
of the executive or administrative duty entrusted to it. In carrying
out their quasi-judicial functions, the administrative officers or
bodies are required to investigate facts or ascertain the existence of
facts, hold hearings, weigh evidence, and draw conclusions from
them as basis for
19
their official action and exercise of discretion in a
judicial nature.
In questioning the validity or constitutionality of a rule or
regulation issued by an administrative agency, a party need not
exhaust administrative remedies before going to court. This
principle applies only where the act of the administrative agency
concerned was performed pursuant to its quasi-judicial function, and
not when the assailed act pertained to its rule-making or quasi-
_______________
17 Romulo, Mabanta, Buenaventura, Sayoc and De Los Angeles v. Home

Development Mutual Fund, G.R. No. 131082, 19 June 2000, 333 SCRA 777, 785-
786.
18 Conte v. Commission on Audit, 332 Phil. 20, 36; 264 SCRA 19 [1996].
19 Bellosillo, J., Separate Opinion, Commissioner of Internal Revenue v. Court of
Appeals, G.R. No. 119761, 29 August 1996, supra.
688

legislative power. In Association20 of Philippine Coconut Dessicators

v. Philippine Coconut Authority, it was held:
The rule of requiring exhaustion of administrative remedies before a party

may seek judicial review, so strenuously urged by the Solicitor General on
behalf of respondent, has obviously no application here. The resolution in
question was issued by the PCA in the exercise of its rule-making or
legislative power. However, only judicial review of decisions of
administrative agencies made in the exercise of their quasi-judicial function
is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion of

administrative remedies apply in this case, the records reveal that
petitioners sufficiently complied with this requirement. Even during
the drafting and deliberation stages leading to the issuance of
Memorandum Circular No. 13-6-2000, petitioners were able to
register their protests to the proposed billing guidelines. They
submitted their respective position papers setting forth their21
objections and submitting proposed schemes for the billing circular.
After the same22
was issued, petitioners
23
wrote successive letters dated
July 3, 2000 and July 5, 2000, asking for the suspension and
reconsideration of the so-called Billing Circular. These letters were
not acted upon until October 6, 2000, when respondent NTC issued
the second assailed Memorandum implementing certain provisions
of the Billing Circular. This was taken by petitioners as a clear
denial of the requests contained in their previous letters, thus
prompting them to seek judicial relief.
In like manner, the doctrine of primary jurisdiction applies only
where the administrative agency exercises its quasi-judicial or
adjudicatory function. Thus, in cases involving specialized disputes,
the practice has been to refer the same to an administrative agency
of special competence pursuant to the doctrine of primary
jurisdiction. The courts will not determine a controversy involving a
question which is within the jurisdiction of the administrative
tribunal prior to the resolution of that question by the administrative
tribunal, where the question demands the exercise of sound
administrative discretion requiring the special knowledge, experi-
_______________
20 G.R. No. 110526, 10 February 1998, 286 SCRA 109, 117.

21 Rollo, G.R. No. 152063, pp. 57-78.
22 Id., pp. 79-86.
23 Id., pp. 87-89.
689
VOL. 408, AUGUST 12, 2003 689

ence and services of the administrative tribunal to determine

technical and intricate matters of fact, and a uniformity of ruling is
essential to comply with the premises of the regulatory statute
administered. The objective of the doctrine of primary jurisdiction is
to guide a court in determining whether it should refrain from
exercising its jurisdiction until after an administrative agency has
determined some question or some aspect of some question arising
in the proceeding before the court. It applies where the claim is
originally cognizable in the courts and comes into play whenever
enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, has been placed within the special
competence of an administrative body; in such case, the judicial
process is suspended pending24 referral of such issues to the
administrative body for its view.
However, where what is assailed is the validity or
constitutionality of a rule or regulation issued by the administrative
agency in the performance of its quasi-legislative function, the
regular courts have jurisdiction to pass upon the same. The
determination of whether a specific rule or set of rules issued by an
administrative agency contravenes the law or the constitution is
within the jurisdiction of the regular courts. Indeed, the Constitution
vests the power of judicial review or the power to declare a law,
treaty, international or executive agreement, presidential decree,
order, instruction, ordinance,
25
or regulation in the courts, including
the regional trial courts. This is within the scope of judicial power,
which includes the authority of the courts to determine in an
appropriate 26action the validity of the acts of the political
departments. Judicial power includes the duty of the courts of
justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction
27
on the part of any branch or instrumentality of
the Government.
_______________
24 Fabia v. Court of Appeals, G.R. No. 132684, 11 September 2002, 388 SCRA
574.
25 Spouses Mirasol v. Court of Appeals, G.R. No. 128448, 1 February 2001, 351
SCRA 44, 51.
26 Santiago v. Guingona, Jr., G.R. No. 134577, 18 November 1998, 298 SCRA
756, 774.
27 CONSTITUTION, Art. VIII, Sec. 1, second paragraph.
690

In the case at bar, the issuance by the NTC of Memorandum Circular

No. 13-6-2000 and its Memorandum dated October 6, 2000 was
pursuant to its quasi-legislative or rule-making power. As such,
petitioners were justified in invoking the judicial power of the
Regional Trial Court to assail the28 constitutionality and validity of the
said issuances. In Drilon v. Lim, it was held:
We stress at the outset that the lower court had jurisdiction to consider the
constitutionality of Section 187, this authority being embraced in the general
definition of the judicial power to determine what are the valid and binding
laws by the criterion of their conformity to the fundamental law.
Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all
civil cases in which the subject of the litigation is incapable of pecuniary
estimation, even as the accused in a criminal action has the right to question
in his defense the constitutionality of a law he is charged with violating and
of the proceedings taken against him, particularly as they contravene the
Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests
in the Supreme Court appellate jurisdiction over final judgments and orders
of lower courts in all cases in which the constitutionality or validity of any
treaty, international or executive agreement, law, presidential decree, 29
proclamation, order, instruction, ordinance, or regulation is in question.
In their complaint before the Regional Trial Court, petitioners

averred that the Circular contravened Civil Code provisions on sales
and violated the constitutional prohibition against the deprivation of
property without due process of law. These are within the
competence of the trial judge. Contrary to the finding of the Court of
Appeals, the issues raised in the complaint do not entail highly
technical matters. Rather, what is required of the judge who will
resolve this issue is a basic familiarity with the workings of the
cellular telephone service, including prepaid SIM and call cards—
and this is judicially known to be within the knowledge of a good
percentage of our population—and expertise in fundamental
principles of civil law and the Constitution.
Hence, the Regional Trial Court has jurisdiction to hear and
decide Civil Case No. Q-00-42221. The Court of Appeals erred in
setting aside the orders of the trial court and in dismissing the case.
_______________
28 G.R. No. 112497, 4 August 1994, 235 SCRA 135.

29 Id., at pp. 139-140.
691
VOL. 408, AUGUST 12, 2003 691

WHEREFORE, in view of the foregoing, the consolidated petitions

are GRANTED. The decision of the Court of Appeals in CA-G.R.
SP No. 64274 dated October 9, 2001 and its Resolution dated
January 10, 2002 are REVERSED and SET ASIDE. The Order
dated November 20, 2000 of the Regional Trial Court of Quezon
City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED.
This case is REMANDED to the court a quo for continuation of the
proceedings.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Vitug and Carpio, JJ., concur.

Azcuna, J., I take no part.
Petitions granted, judgment reversed and set aside. Case

remanded to court a quo for further proceedings.
Note.—Where an administrative department acts with grave

abuse of discretion, which is equivalent to a capricious and
whimsical exercise of judgment, or where the power is exercised in
an arbitrary or despotic manner, there is a justification for the courts
to set aside the administrative determination thus reached. (Gloria
vs. Court of Appeals, 338 SCRA 5 [2000])
——o0o——
692
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1/12/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 408

678 SUPREME COURT REPORTS ANNOTATED

GLOBE TELECOM, INC. (GLOBE) and ISLA

Administrative Law; National Telecommunications Commission;

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Smart Communications, Inc. (SMART) vs. National Telecommunications

primary jurisdiction applies only where the administrative agency exercises

680 SUPREME COURT REPORTS ANNOTATED

Smart Communications, Inc. (SMART) vs. National Telecommunications

formity of ruling is essential to comply with the premises of the regulatory

justice to settle actual controversies involving rights which are legally

PETITION for review on certiorari of a decision of the Court of

The facts are stated in the opinion of the Court.

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Pursuant to its rule-making and regulatory powers, the National

(1) The billing statements shall be received by the subscriber of

no additional charge except the presentation of a valid

The Memorandum Circular provided that it shall take effect 15 days

1 Rollo, G.R. No. 151908, pp. 225-228. 681

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a. strictly comply with Section B(l) of MC 13-6-2000

e. require all your existing prepaid SIM card3 customers to

This was followed by another Memorandum dated October 6, 2000

2 Rollo, G.R. No. 152063, p. 112.

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On October 20, 2000, petitioners Isla Communications Co., Inc. and

card buyers and call balance announcement are unreasonable.

5 Id., pp. 231-247.

684 SUPREME COURT REPORTS ANNOTATED

court issued on November 20, 2000 an Order, the dispositive portion

“WHEREFORE, premises considered, the defendants’ motion to dismiss is

Defendants filed a motion for reconsideration,

CA-G.R. SP No. 64274. On October 9, 2001, a decision was

“WHEREFORE, premises considered, the instant petition for certiorari and

Petitioners’ motions for reconsideration were

8 Id., pp. 274-277.

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THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED

THE HONORABLE COURT OF APPEALS ERRED IN NOT

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING

Likewise, Globe and Islacom filed a petition for review, docketed

1. THE HONORABLE COURT OF APPEALS SO

12 Id, pp. 23-24.

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TRATIVE REMEDIES DOES NOT APPLY WHEN THE

THERE IS NO OTHER REMEDY, AND THE

The two petitions

13 Rollo, G.R. No. 152063, pp. 14-15.

VOL. 408, AUGUST 12, 2003 687

control with respect to what rules and regulations may be

17 Romulo, Mabanta, Buenaventura, Sayoc and De Los Angeles v. Home

688 SUPREME COURT REPORTS ANNOTATED

legislative power. In Association20 of Philippine Coconut Dessicators

The rule of requiring exhaustion of administrative remedies before a party

Even assuming arguendo that the principle of exhaustion of

20 G.R. No. 110526, 10 February 1998, 286 SCRA 109, 117.

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ence and services of the administrative tribunal to determine

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Telecommunications Commission (NTC)

In the case at bar, the issuance by the NTC of Memorandum Circular

In their complaint before the Regional Trial Court, petitioners

28 G.R. No. 112497, 4 August 1994, 235 SCRA 135.